Installment Accounts Delinquent
Each day, the amount of accounts revived—delinquent accounts on which payments have been received—should be ascertained. If it is desired to save the labor of making journal entries daily, a memorandum of these amounts may be kept and a journal entry made at the end of the month.
When a delinquent account reaches the condition where it is considered worthless, the amount should be charged to profit and loss, by the journal entry:
Profit and Loss
Installment Accounts Delinquent
This should be done whenever the credit man carefully examines all delinquent accounts, which should be not less frequently than once a month. When payments are received on these accounts, they should be treated as revived accounts, with proper credit to profit and loss, if revived during the current fiscal period; but if, in the meantime, the books have been closed, they should be treated as new accounts.
It is quite necessary for the credit man to know every day how the installment accounts are running. That he may do this, a daily report, as shown in Fig. 26, should be made by the installment collection clerk. The report form should be in loose-leaf, and if the installment sales are divided by departments, the necessary number of columns to accommodate the departmental records may be provided.
The report is headed with the amounts of accounts outstanding, divided as to live and delinquent. New accounts opened and delinquents revived are added in the live column, and delinquents revived are deducted from the delinquent column. Cash collections, discounts and allowances, and delinquents today are deducted separately from the live accounts, and delinquents today added to the delinquent column. Then the delinquents charged to profit and loss are deducted from the delinquent column. The balances represent the net amount of outstanding accounts, and must agree with the two controlling accounts, Installment Accounts Receivable and Installment Accounts Delinquent.
